IRS Levied My PayPal or Stripe Account – What to Do Next
Yes, the IRS Can Levy Your Payment Processor—and They’re Doing It More Often
If the IRS recently seized funds from your PayPal, Stripe, Square, or Venmo Business account, you’re likely shocked and wondering what happened—and what to do.
These levies are becoming more common as the IRS aggressively targets self-employed individuals, online sellers, gig workers, and small business owners who rely on third-party payment processors.
In this blog, we explain how these levies work, what to do immediately, and how to protect your cash flow going forward.
How the IRS Can Levy a PayPal or Stripe Account
Under IRC §6331, the IRS has broad authority to levy any third-party holding money on your behalf, including:
- Digital wallets (PayPal, Venmo Business, etc.)
- Payment processors (Stripe, Square, etc.)
- Merchant accounts
The IRS sends Form 668–A to the platform, and they are legally required to freeze and remit the funds — just like an IRS bank account levy in California.
What Triggers a Digital Payment Levy?
Digital account levies are often issued when:
- You owe federal tax debt
- You ignored prior notices (CP504, LT11)
- The IRS knows or suspects you earn income through online platforms
- Your bank accounts have already been levied or protected
This is why responding to an IRS notice of intent to levy quickly is so critical — ignoring notices almost always leads to harsher enforcement.
What to Do Immediately After a Levy
Step 1: Log into Your PayPal or Stripe Account
Check:
- Balance history and frozen funds
- Notifications from the payment platform
- IRS correspondence uploaded to your account (some platforms share it digitally)
If you’re panicking, you’re not alone — many taxpayers call us saying IRS seized my bank account and don’t know how to get funds release.
Step 2: Call the IRS or Hire Representation
The IRS will not release the funds unless you:
- Enter a formal Installment Agreement
- Submit an Offer in Compromise
- Qualify for Currently Not Collectible
- Demonstrate hardship or IRS error
If you’re wondering can you stop an IRS levy after it starts, the answer is yes — but only with swift action and documentation.
Step 3: Request a Manual Levy Release
If the seizure created serious business interruption or hardship (e.g., missed payroll, withheld client funds), the IRS may release the levy.
You’ll need:
- IRS Form 433-A or 433-B
- Business cash flow statements
- Written explanation and supporting documents
Can You Recover the Funds?
Yes—if you act before the funds are transferred (or in some cases, shortly after). Otherwise, they are applied to your tax balance, and you’ll need to resolve the remaining debt.
Many business owners only call us after the damage is done, asking how to deal with IRS wage garnishment enforcement or levies that hit both payment processors and payroll. Acting early is always the better strategy.
How to Prevent Future Levies on Digital Accounts
- Resolve the tax debt through settlement or payment
- Bring all returns current
- Set up a payment plan with direct debit
- Avoid using personal platforms (e.g., Venmo personal) for business transactions
We Help Orange County Business Owners Stop IRS Levies on Payment Platforms
At Boulanger CPA and Consulting PC, we:
- Respond to IRS levies on PayPal, Stripe, Square, and more
- File for levy release and hardship relief
- Negotiate resolutions to stop future levies
- Help small business owners protect their income and operations
Learn more about your options and explore more in Defend What’s Yours to protect your accounts and safeguard your livelihood.
📞 Call (657) 218-5700 or request urgent help at www.orangecounty.cpa
Frequently Asked Questions
Can the IRS levy PayPal or Stripe accounts?
Yes. The IRS can issue a levy to third-party payment processors like PayPal or Stripe, freezing funds in your account and redirecting them to satisfy unpaid tax debt.
Why would the IRS target my PayPal or Stripe account?
Payment processor accounts are often used by small businesses and freelancers. If you owe back taxes, the IRS may target these accounts as a way to quickly collect funds.
How much time do I have before funds are sent to the IRS?
Once the levy is issued, funds may be frozen and sent to the IRS without the 21-day hold that applies to traditional bank accounts. Acting immediately is critical.
Can I get seized PayPal or Stripe funds back?
Possibly. If the levy caused hardship or was issued in error, you may be able to request a return of funds. However, once transferred, refunds are rare.
How can I stop future levies on my accounts?
You can prevent future levies by negotiating an installment agreement, submitting an Offer in Compromise, or requesting Currently Not Collectible status.
Does the IRS have to notify me before levying PayPal or Stripe?
Yes. The IRS must send prior notices, including a Final Notice of Intent to Levy. However, many taxpayers overlook or misunderstand these notices before enforcement begins.
Do California agencies like CDTFA or EDD also levy digital payment accounts?
Yes. California tax agencies can issue levies on payment processors if state taxes are owed, similar to IRS enforcement actions.
Should I hire professional help if my PayPal or Stripe is levied?
Yes. Payment processor levies can cripple cash flow. A tax professional can negotiate with the IRS and set up protections to keep your business running.
📣 About the Author
Marc Boulanger, CPA is the founder of Boulanger CPA and Consulting PC, a boutique tax resolution firm based in Orange County, California and trusted by high-income individuals and business owners across Southern California.
He is the author of Defend What’s Yours: A California Taxpayer’s Guide to Beating the IRS and FTB at Their Own Game, available now on Amazon. The book offers a step-by-step plan for resolving IRS and FTB tax debt without losing your business, your home, or your peace of mind.
With over a decade of experience resolving high-stakes IRS and State tax matters, Marc brings strategic insight to complex cases involving wage garnishments, bank levies, unfiled returns, and six-figure tax debts. He is known for helping clients reduce or eliminate tax liabilities through expertly negotiated settlements and compliance plans.
Marc is a Certified Public Accountant licensed in California and Oklahoma and holds the designation of Certified Tax Representation Consultant. He is a member of the American Society of Tax Problem Solvers (ASTPS) — the national organization founded by the educators and practitioners who have trained thousands of CPAs, EAs, and tax attorneys in IRS representation strategy.
Every case is handled with discretion, proven methodology, and direct CPA-led representation — not call center scripts.
📍 Learn more at www.orangecounty.cpa or call (657) 218-5700.
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